MUMBAI, May 27 (Reuters) – Indian government bond yields are expected to move sideways in early deals on Tuesday, as market participants await fresh triggers that include the nation’s growth data and the monetary policy decision due over the next few days.
The yield on the new benchmark 10-year bond is expected to move between 6.19% and 6.23%, a trader with a private bank said, compared with the previous close of 6.2046%. The 2034 bond yield settled at 6.2539%.
“With the new benchmark bond yield at 6.20%, we should see some further consolidation until the next major trigger, which seems to be the auction and growth data, both of them due on Friday,” the trader said.
New Delhi will sell the benchmark 2035 bond worth 300 billion rupees ($3.53 billion) on Friday, followed by the release of the country’s economic growth data for January-March.
The economy likely grew 6.7% in January–March, up from 6.2% in the previous quarter, according to a Reuters poll.
The Reserve Bank of India’s monetary policy decision is also on June 6, where a third consecutive rate cut of 25 basis points is widely expected.
The RBI has cut the repo rate by 50 basis points since April and has infused around $100 billion in the last six months.
Meanwhile, bond yields are expected to decline further in the medium term, even as the central bank’s surplus transfer fell short of market expectations.
The RBI approved the transfer of 2.69 trillion rupees as surplus to the government in fiscal 2025, beating the previous year’s 2.11-trillion-rupee transfer, but lower than expectations of more than 3 trillion rupees.
Overnight index swap (OIS) rates are also likely to see some consolidation, after witnessing sharp decline over the last few weeks.
The one-year OIS was at 5.53%, and the two-year OIS rate was at 5.44%.
The most liquid five-year ended at 5.63% on Monday. KEY INDICATORS: ** Brent crude futures were 0.25% higher at $64.95 per barrel, after rising 0.5% in previous session ** Ten-year U.S. Treasury yield at 4.5110%; two-year yield at 3.9870%
** Indian states aim to raise 158 billion rupees through bond sale ** RBI to conduct one-day variable rate repo auction for 250 billion rupees ($1 = 85.0630 Indian rupees) (Reporting by Dharamraj Dhutia; Editing by Janane Venkatraman)
